All Saints Health System, et al. v. Texas Workers' Compensation Commission, et al.

John D. Pringle

Case Conclusion Date:July 24, 2003

Practice Area:Workers Compensation

Outcome:Medical services fees must be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control.

Description:he hospitals rendered services to workers' compensation claimants under a 1992 hospital fee guideline, which was invalidated in 1995. The appellate court had to determine what standards to apply to the hospitals' additional reimbursement requests. The hospitals wanted to resurrect an expired temporary rule, which they argued was the last standard in place before the 1992 fee guideline's adoption. The insurers argued that the Commission should base its reimbursement decisions primarily on the terms of the hospitals' managed care contracts. The appellate court found that, when a rule was invalidated based on the Texas Administrative Procedure Act's reasoned justification requirement, both its specific provisions and any concomitant policy changes reverted to the standard in place at the time of the rule's adoption. Thus, pursuant to Tex. Lab. Code Ann. § 413.011(d) (1996) and 28 Tex. Admin. Code § 134.1 (2003), the determination of fair and reasonable reimbursement for the hospitals had to be calculated on a fee-for-service basis, taking into account both cost-savings and quality of care. The hospitals' managed care contracts did not per se constitute a cap on reimbursement.